Offering COBRA coverage after employee theft depends heavily on the facts
Q We fired an employee because of theft, and he is currently incarcerated. Do we have to offer COBRA due to these circumstances?
A COBRA, the Consolidated Omnibus Budget Reconciliation Act, requires covered employers to provide eligible employees continued health insurance coverage for a period of time after a qualifying event, such as the termination of employment. Covered employers aren’t required to offer coverage under COBRA if the employee’s termination is the result of “gross misconduct.” This designation renders the subject employee, as well as their covered spouse and/or dependent children, ineligible for COBRA.
What qualifies as “gross misconduct”? Well, that depends. COBRA doesn’t define, specify criteria, or list examples of actions or behaviors that may constitute gross misconduct. The federal Office of Personnel Management loosely defines gross misconduct “for purposes of qualifying for temporary continuation of coverage . . . [as] a flagrant and extreme transgression of law or established rule of action for which you are separated from service and for which a judicial or administrative finding of gross misconduct has been made.”
Without statutory or regulatory guides, courts have reviewed this issue on a case-by-case basis. In doing so, they rely on the facts and circumstances surrounding the termination to determine whether they amount to gross misconduct. Some common considerations include the following: